DX / Menzies merger off

After some months of negotiation, the board of DX Group and Menzies Distribution have together announced that the merger will not progress.

DX Group released a statement that said while “the proposed combination had strong strategic logic for all stakeholders”, they had been “unable to agree suitable terms”.

DX will therefore continue as a standalone business.

According to the DX statement, “This approach has the support of both DX’s major shareholder and its bankers, with discussions on new financing options for DX already underway”.

The major shareholder in question is Gatemore Capital Management, that recently increased its stake to 21.3% and called on the firm to bring new blood into the management of DX. Gatemore have released a statement saying that they are happy with the move to remain independent.

Gatemore said in their statement that it had “secured the support of DX Group’s board to appoint four highly-experienced members who have a track record in effecting remarkable turnarounds in the logistics sector”.

The four new proposed board members are: Ron Series, who is proposed as Chairman designate; and Paul Goodson, Russell Black and Lloyd Dunn, who are proposed as Non-executive Directors.

Chairman Bob Holt is to remain temporarily and then retire after the changes are made.

Liad Meidar, CIO and Managing Partner at Gatemore Capital Management, said: “We are excited about the prospects for DX as a stand-alone company, especially under the leadership of the new board.  Each of the four new directors brings significant sector experience.  Ron Series and Lloyd Dunn can in fact be directly credited with the remarkable turnaround of Tuffnells, DX’s main competitor in freight.

“We appreciate Bob Holt’s stewardship of the Company throughout a challenging period and believe that the board arrived at the right conclusion with the Menzies transaction.  We strongly believe that with leading positions in document exchange, secure delivery and IDW freight, DX is well positioned to thrive on a stand-alone basis.

“We stand firmly behind the new team and are confident they will achieve tremendous success at DX.”

In addition, John Menzies released a statement that said, “Notwithstanding the strong strategic and commercial benefits which would arise from a combination of Menzies Distribution and DX, and despite further discussions with DX following the DX announcement of 14 July 2017, the John Menzies Board does not believe it is currently possible to agree a revised set of terms with DX for the Combination which would be in the interests of John Menzies shareholders. John Menzies has therefore terminated discussions with DX.”

John Menzies added that it “remains confident in the quality of the Menzies Distribution business, the strength of its operations and its future prospects”, and it ”continues to believe there is strategic merit in and potential shareholder value to be created by separating, at the appropriate time, its Aviation and Distribution divisions into two strategically focussed and independent businesses”.

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